When markets are volatile, and interest rates are holding steady, many investors start wondering where to park their money. Cash might seem safe, but inflation eats away at it. Bonds are steady but slow. And some sectors feel a little too risky these days. That’s why, if I had $30,000 to invest right now, I’d put it to work in two of Canada’s most stable, dividend-paying utility stocks: Capital Power (TSX:CPX) and TransAlta (TSX:TA). Each offers exposure to the future of energy, consistent cash flow, and a strong long-term growth case.
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CPX
Capital Power is an Edmonton-based utility company that develops, owns, and operates a mix of renewable and thermal power generation assets across North America. Its portfolio includes wind, solar, natural gas, and energy storage projects. What makes it appealing is that it’s transitioning into cleaner power while still generating healthy cash flows from its traditional operations.
In its first-quarter (Q1) 2025 earnings report, Capital Power posted impressive results. Revenue came in at $867 million, up from $778 million in the same quarter last year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped to $367 million, compared to $279 million a year earlier. Net income hit $150 million, or $1.25 per share. Perhaps more importantly for dividend-focused investors, adjusted funds from operations (AFFO) were $218 million, or $1.57 per share. That kind of performance gives it room to maintain and grow its dividend, which currently pays $0.6519 per quarter.
Capital Power is also investing heavily in long-term growth. It recently acquired the 1,085-megawatt Hummel Station in Pennsylvania and is advancing projects in carbon capture and battery storage. It has a strong pipeline of renewable projects under development and maintains a disciplined capital allocation strategy. Its mix of growth and income makes it a great pick for patient investors.
TA
Then there’s TransAlta, a Canadian stock many Canadians know but often overlook as an investment. Headquartered in Calgary, TransAlta has been generating electricity for more than 100 years. It operates wind, hydro, natural gas, and battery storage facilities across Canada, the U.S., and Australia. After a few tough years earlier in the decade, the Canadian stock has stabilized and is now thriving.
In its Q1 2025 earnings report, TransAlta reported revenue of $758 million, up from $678 million the year before. Adjusted EBITDA was $270 million, and free cash flow totalled $190 million. Net earnings attributable to common shareholders were $176 million, or $0.65 per share. It continues to offer a dividend of $0.26 per share annually.
While that yield isn’t huge, it reflects the Canadian stock’s steady approach. TransAlta has paid a dividend for 38 consecutive years, even during periods of market stress. And now it’s back in expansion mode. It’s building wind and solar farms across Alberta and the U.S., and it’s partnering with Indigenous communities and industrial users to grow its renewable footprint. It’s also making moves in energy storage and off-grid power, which could be major themes over the next decade.
Foolish takeaway
What sets both of these companies apart is that they provide essential services. Power demand is not going away. In fact, with the rise of electric vehicles, artificial intelligence (AI) data centres, and electrified infrastructure, demand is expected to grow. These Canadian stocks are positioned to meet that demand and get paid to do it.
If I had $30,000 to invest today, I’d likely put $15,000 in Capital Power and $15,000 in TransAlta. That split gives me one company with a higher dividend yield and a clear path to near-term cash flow growth and another that’s lower-yielding but heavily investing in green power and long-term projects. Together, these provide a nice mix of income, growth, and stability.
In uncertain times, it helps to own businesses that don’t rely on hype to deliver value. Power generation isn’t glamorous, but it’s dependable. And these Canadian stocks are doing it well. For Canadian investors looking to put money to work without chasing high-risk bets, Capital Power and TransAlta are two of the best stocks to consider buying right now.
